FTA Decision No. 13 of 2026, explained

At a glance

Why the decision exists

Article 54(bis) of the VAT Law lets the FTA refuse input tax where a supply is connected to tax evasion. The decision explains how a business should check the “validity and integrity” of the supplies it receives before it deducts input tax. It defines Tax Evasion as a person's use of illegal means resulting in the reduction of the tax due, its non-payment, or a refund the person was not entitled to.

In practice this means a valid tax invoice is no longer the whole story: you are expected to know who you are buying from and whether the supply makes sense, and to be able to show what you checked. Read more in our guide to Article 54 bis and input VAT recovery.

Article 3: verify the supplier

1. Identity

• Natural person: obtain a copy of valid proof of identity, such as an Emirates ID or passport, and meet the supplier — in person or virtually — before the supply is made.
• Legal person: verify the incorporation through official databases or obtain a copy of the certificate of incorporation, with incorporation details that are valid and match the entity's name, address and employees. Also verify the identity of the director, agent or employee authorised to represent the supplier (Emirates ID or passport).

2. Address and place of business

Confirm that the supplier has an actual place of business — using appropriate electronic means or a field visit — and that the premises fit the activities the supplier carries out.

3. Risk indicators

Check that none of these applies:

1. The supplier changed its address more than twice in the previous 12 months.
2. The supplier changed its key employees — its managers or the people you deal with — more than twice in the previous 12 months.
3. The supplier carried out transactions that are disproportionate or unexpected in volume, value or nature compared with the size and history of its business.

If an indicator does apply, keep a clear, justified explanation that is consistent with the information you hold, and be ready to give it to the FTA on request.

4. Suppliers above AED 375,000

Where supplies from one supplier exceed AED 375,000 over the previous 12 months — or are expected to over the next 12 — you also need to:

• obtain a written confirmation from an authorised bank in the UAE that the supplier has a bank account, without reservations or conditions (it does not have to be addressed to you);
• review publicly available reviews and media coverage from reliable sources, and check they fit the nature and size of the supplier's business with no indicators of suspected tax evasion;
• review clients' recommendations where they are available.

More on how the amounts work in our thresholds guide.

Article 4: verify each supply

General assessment

Assess the conditions of the transaction and make sure the supplier's involvement is based on genuine commercial reasons.

Payment conditions

• The payment method and conditions must be justifiable for commercial reasons. If a third party pays or receives the payment, or the money goes to a bank account outside the supplier's country of incorporation, there must be a reasonable commercial explanation that does not contradict what you know.
• Payment should be made by electronic means. Cash payments need a documented commercial reason, must stay within the thresholds in tax legislation and must be easy to verify.

Circumstances of the supply

• Prices or profit margins must not be commercially unjustifiable or far from market conditions without a clear reason.
• The goods or services must fall within the supplier's ordinary activity and its licensed activities.
• For goods: verify their authenticity and origin, and the supplier's ownership of them or right to dispose of them.
• Where the supplier acts as an intermediary, there must be a clear and justifiable commercial explanation for its role.

Article 5: timing, records and policy

1. Supplier checks (Article 3) are due when you deal with a supplier for the first time, and on recurring dealings when the supplier has not been verified in the previous 12 months.
2. Supply checks (Article 4) apply to each taxable supply you receive or accept.
3. Documentation: record the verification steps and keep the supporting documents and records so the FTA can check how you applied them.
4. Written policy: keep a documented policy that names who implements, reviews and supervises the verification procedures, with their powers and responsibilities, stored where you keep your required records. See what to put in a supplier verification policy.

The decision is written for checks made before you deduct input tax, and some steps only make sense beforehand — such as meeting a supplier who is an individual before the supply. If you verify purchases afterwards, the record can show what was checked and what is missing, but it cannot make up for a step that had to happen earlier. Discuss with your tax adviser what that means for input tax you have already deducted.

Article 6: the low-value exception

You may disregard the measures for taxable supplies where the consideration, excluding VAT, is less than AED 10,000. That exception does not apply where the total value of supplies from that supplier exceeds AED 100,000 over the previous 12 months, or is expected to over the next 12 months.

The decision states that the AED 10,000 test is exclusive of VAT; it does not say so explicitly for the AED 100,000 and AED 375,000 totals. Agree the basis you use with your tax adviser and apply it consistently.

Supplier checks vs supply checks

What to do now

1. List your suppliers with their 12-month totals and mark which fall under the exception, which need standard checks and which pass AED 375,000.
2. Collect the supplier documents, check the place of business and the risk indicators, and record what you found.
3. Review each in-scope supply: commercial reason, payment method and route, pricing, licensed activity and — for goods — origin.
4. Write down who does, reviews and supervises the checks in a short policy, and keep the records together.
5. Plan re-verification: suppliers you keep buying from need checking again when 12 months have passed since their last verification.

Whether input tax can be deducted in a particular case is a judgement for your business and its tax adviser. What the decision asks of you is careful, documented checking — which is exactly the work we take off your hands. See our supplier verification checklist, or see what it costs to have it done.